The Everyday Bank. How digital is revolutionizing banking. Petr Ložek March 6, 2014

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1 The Everyday Bank How digital is revolutionizing banking Petr Ložek March 6, 2014

2 About Us 2

3 What We Do Accenture is a global management consulting, technology services and outsourcing company We help organizations assess how to maximize their performance and work with them to achieve their vision We develop and implement technology to improve our clients productivity and efficiency and may run parts of their business Ultimately, we enable our clients to become highperformance businesses and governments 3

4 Key Differentiators Enduring collaborative client relationships at the C-suite level with many of the world s leading companies Global breadth and depth across more than 40 industries and hundreds of offerings addressing key business and technology issues World s largest independent technology services provider, with proven track record for complex, end-to-end transformational projects Global Delivery Network provides clients with high-quality solutions, lower costs and quicker results The best people in our industry, functionally specialized in particular industries and/or technological skills Powerful culture of innovation, collaboration and teaming 4

5 An Enviable Client Roster Over 4,000 clients in more than 120 countries We serve 91 of the Fortune Global 100 and more than three-quarters of the Fortune Global of our top 100 clients have been clients for at least five years 91 of our top 100 clients have been clients for at least 10 years 5

6 A Privileged Position in the Technology Ecosystem We have strategic relationships with leading technology providers including Microsoft, SAP, Oracle, Cisco, EMC, Salesforce and others Through our Avanade joint venture, we deliver more Microsoft technology than any other company in the world Accenture is the No. 1 systems integration partner for both Oracle and SAP We are agnostic about technology but have very clear viewpoints about what is most appropriate for a client s particular challenge Because we know our partners and their technology inside-out, we can rapidly tailor solutions to each client s specific needs Our ecosystem of working relationships magnifies our capabilities, cuts project risk, and speeds procurement and vendor evaluation We share best practices and collaborate on development with technology providers to help clients innovate and enhance performance 6

7 The Everyday Bank How digital is revolutionizing banking Petr Ložek March 6, 2014

8 Digital Revolution Drivers The reality is that change will be driven by emerging customer behaviors

9 1 Digital is revolutionizing customer expectations Change expectations our customers have Sell experiences that replace ours Sell products that compete with ours Experiential Direct Competitors Perceptual 9

10 1 shifting more power to customers Customer 3.0 profile Highly informed Harnesses information more effectively than any previous generation to compare product features, benefits or prices Price Sensitive Places emphasis on value for money as opposed to brand name alone Socially Connected Uses social media as a powerful medium to spread good and bad reviews more quickly than ever before Trust the Crowd Values expertise within their social networks more than that spoken by the brand itself 79% of smartphone owners use their phone to help with shopping 64% of people will go 5-10 minutes out of their way to secure a better price 30% of mobile time is spent on social media accounts 4:1 shoppers prefer online ratings to advice from store employees Self Promoting Happily publish and promote themselves, their exploits, their decisions and their opinions Instant Gratification Expect products and services to be delivered to a place, and at a time that best suits them Security Unawares Upload an extraordinary amount of information about themselves, work experiences and personal preferences 2.5 B Facebook content shares per day 57% of US consumers are likely to abandon an online purchase if an answer to an online purchase is not immediately forthcoming 25 B web links, news stories, blog posts, notes, and photo albums are shared each month 10

11 1 What if FIs could engage customers on their terms? The New Mental Model of Marketing Personal life Stimulus KEY DRIVERS ZMOT Pre-shopping/ in-store/at-home First Moment of Truth Talked with Mail from a bank 40% Search engine 61% 51% a FS person Second Moment of Truth Experience Customers always connected Professional life Ad on TV 36% Talked with friends/ family 59% Brochure in FS location 43% Newspaper 30% Bank website 58% Customer service (phone) 39% Q2 When you were considering purchasing [PRODUCT], what sources of information did you seek out to help with your decision? Base: N=250 Source: Google/Shopper Sciences, Zero Moment of Truth Study Banking 11

12 2 Technology is a key enabler of the Digital Transformation Mobility Cloud Analytics Social Interactive Multi-devices, anytime and anywhere access are drivers for interaction and engagement Enabler of the operating model scalability as well as reducing transaction unit cost From transactional and open data sources enabling scientific decision making Manage social to influence and build communities, listen to social for needs Leverage to build new products aimed at specific segment and user experiences across digital touch-points 12

13 3 The relationship between demand and offer is changing and rearranging the traditional value chain Value to ecosystem players 30 50% 1 3% 20 40% Pre-sale Sale Post sale Promotions Coupons Targeted Ads Location- Based and Social Marketing Analytics Cash to Digital Digital Proxy for Bank Internet of Things Loyalty (accumulation, redemption of points) Customer Care Add-on Sales Analytics Banks have the opportunity to extend their reach into the Value Chain intercepting additional revenue streams which already today attract players 13

14 4 New digital competitors are contesting specific business areas 32% banking revenues will be at risk by 2020 Deposit and Current Account Payment and Credit Card Lending Asset Management/ Bancassurance 17.4% Online Banking, alternative deposit products and mobile money accounts compete for market share and compress margins 6% Shift of payments market share to alternative providers and merchants, with interchange fee reduction 4.9% Competition from direct/ peer-to-peer mortgage providers and asset owners 3.4% Direct competition due to price comparison portals and fee reduction from direct trades 14

15 5 Money on the table The decision to evolve into the Everyday Bank is a mission-critical, we expect a gap of at least 50 percentage points in Operating Income between Banks who undertake the journey and those who do not INDICATIVE % 100% 50 pp Up to 30 pp Pre-tax Profits today Revenues at Risk Defensive Actions Additional Revenue Pools Efficiency Gain Pre-tax Profits by

16 The "Everyday Bank" Banks need to develop a unique value proposition to meet the needs of Customer 3.0, avoid commoditization and challenge competitors DIGITAL OFFER CREATION Products for the Digital Age FS and non-fs Easy, online, accessible Personal, configurable Value Added Personal Banking Advisor Renewed Branch Role Pre-Sale Engagement Modern and Relevant Brand DISTINCTIVE CUSTOMER EXPERIENCE Omni-channel Engagement Simple, intuitive, attractive, coherent End-to-end services across all channels Personalized and relevant client interaction HIGH VALUE HUMAN TOUCH Focused, integrated touchpoints New physical formats Remote advice Leverage passive contact (i.e. payments) 16 Service Excellence Save, Spend, Transfer, Borrow Engaging Digital Interfaces EXTENDED ECOSYSTEM Extend the value chain to meet clients lifecycle needs Grant access to the Ecosystem Single view of customer Real-time aggregation of product/offers 16

17 Two sides of the Everyday Bank Banks, to evolve their strategic role into that of the Everyday Bank, need to extensively apply digital levers to the engine Banks will become Everyday Banks in their relationship with the customer by playing a new role and applying digital levers to power a real-time engine Everyday Bank Capability Model 17

18 Contact Us Petr Ložek Managing Director m Károly Hatfaludy Senior m